Wondering About Crypto Gains and Taxes?

Wondering About Crypto Gains and Taxes?

Now’s the time to get a deduction or offset your gains.

It’s that time of year again where you have a chance to make tax-deductible donations to reduce your taxable income and capital gains. Donating bitcoin can have exceptional benefits for your pocket and causes you support.

You can listen to our recent podcast “How Donating Crypto Can Help You Save on Taxes – Ep. 94” with Laura Shin on Unchained, alongside Joe Waltman at GiveCrypto, and learn a lot more about crypto and charity. The whole show is really enlightening, and we dive into the specifics of tax benefits at min 50:37 (ish).

We’ve also put together some information below that we hope you find useful this tax season and year-round.

Background:

Donations must be made before TAX YEAR END (December 31)

Capital gains on BTC are taxable

Even though the market is down, anyone who bought BTC pre mid-2017 may still have gains!

Many may have not reported gains in the past, but those days have gone

The Basics:

Donations are a great way to give back & reduce taxes

IRS guidance defines bitcoin as ‘property’

Nonprofit who accept BTC will issue the receipt in BTC

Donor has the onus to value the donation in USD

Options for write-offs:

Typical charitable donation: convert BTC to USD, pay taxes on the gains, and then donate in USD

Charity that accepts bitcoin: get the write-off, but the majority of charities will immediately convert it to USD

Donor-advised fund: donate in BTC with the help of a management fund and choose among charities (Fund converts to USD and makes contribution to charity).